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New Standards Provide Guidance for Environmental Diligence, Superfund Liability Protections

By: Jonathan Kalmuss-Katz

In recent months, ASTM International (“ASTM”) has issued or revised key environmental standards governing the performance of and response to environmental site assessments, with potentially significant impacts for lenders, developers and owners of contaminated property. 

Before contaminated property is sold or remediated, federal and state law and transactional due diligence generally require an environmental site assessment to be conducted pursuant to ASTM standards.  Such assessments may be undertaken to preserve the innocent landowner, bona fide prospective purchaser, or contiguous property owner defenses to Superfund liability, which require “all appropriate inquiries” into the environmental conditions on a given site and impose “continuing obligations” to stop, prevent, or limit human exposure to hazardous substance releases.   

Under EPA regulations, compliance with ASTM’s Phase I site assessment standards (E1527-05 or E2247-08) is sufficient to establish “all appropriate inquiries” for the purpose of these defenses.

After more than two years of review and deliberation, ASTM recently revised its Standard Practice for the Phase II Environmental Site Assessment Process (E1903-11).  Phase II site assessment involves the sampling of soil, groundwater or other exposure pathways, typically after a Phase I reveals a likelihood of contamination.  While Phase II assessments are not required under Superfund regulations, they can be useful in determining what “continuing obligations” are needed to establish landowner liability protections.  Phase II assessments may also be required as part of transactional due diligence or to inform a company’s disclosure of its environmental liabilities. 

Recognizing the variety of contexts in which Phase II assessments arise, the revised ASTM standards set forth an iterative process, emphasizing communication between the “user” who commissions the assessment and the “assessor” who performs it.  Unlike the prior standards, the new version requires the user and assessor to agree upon a written statement of objectives that sets the scope of the investigation.  These objectives are tailored to the user’s needs; they can limit the investigation to only certain parts of the Site or certain contaminants, or expand it beyond the recognized environmental conditions (“RECs”) identified in a Phase I.  These objectives may be revised throughout the assessment process, as sampling increases the amount of information about environmental conditions on Site, culminating in the production of a written Phase II Report. 

Last July, ASTM released a new “Standard Guide for Identifying and Complying with Continuing Obligations” (E2790-11).  These standards establish a four-step process for developing and implementing a “continuing obligation plan,” which will be tailored to meet site-specific conditions.  Since “continuing obligations” are broadly defined under CERCLA and its regulations, courts may look to the new ASTM standards for more specific guidance.

For more information on ASTM’s new standards and the environmental site assessment process, contact Michael Bogin or Christine Leas.

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